Companies often get cornered when negotiating renewals on their group benefits. Their position of negotiation is compromised because they take a hands-on approach to managing their plan. It’s usually not by choice because the industry standard is for a company offering employee benefits to manage its own plan but having a staff member hold the knowledge in-house, and having employees direct their questions to this person is costly and subverting leverage.
Larger institutions will have entire HR teams dedicated to these responsibilities while smaller companies sometimes rely on people who already have important things to do like a financial controller, the CFO, or even sometimes the CEO.
Insurance companies have been gradually automating customer service. Both clients and administrators are increasingly expected to use and understand self-serve portals to engage with their plans. Without proper expertise, when complications happen, the experience of engaging with an employee benefits plan can quickly become frustrating. For a plan to be impactful, a subject matter expert needs to be competent, present to take ownership of issues, and employees need to know who this person is and feel comfortable reaching out to them. Properly administering these plans requires attention and expertise, which requires training, all of which is a sunk cost being invested in an insurance company who can offer you a less than competitive renewal proposal.
Insurance companies are benefiting from the fruits of automation while premiums are on the rise, all because the industry standard tilts the process of negotiation in their favor. Changing insurance companies means retraining everyone, which all comes at a cost, and needs to be factored in.
Employers need to externalize these costs by applying pressure on their group benefit advisory firm to take on all the administration. The role of the employer needs to exclusively be oversight. The advisory firm needs to become more present within their employee base to be the first point of contact for not just management, but base level employees. The status quo has the advisory firm handicapping the process by allowing the employer to be the main point contact for day-to-day plan management in the eyes of employees. The transition from one insurance company to another needs to be seamless to be effective and viable so retraining staff shouldn’t weigh into the equation. The advisory firm needs to be front and center within the employee base to provide this environment.
If your firm has internal staff managing any part of your employee benefits plan, you need to look at quantifying the impacts so you can take it up with your advisory firm and require a significant discount in commission. At the very least, you shouldn’t be paying standard rates to have your advisory firm exclusively provide market access and focus on renewal negotiation. It is compromising your renewal negotiations.
Let us audit your group benefits plan to help you quantify this so we can help you reduce costs by externalizing HR expenses and improving your position of negotiation.
